The Learning and Skills Council (LSC) is expected to announce this week that it is to shed up to a quarter of its staff, drastically shrinking the role of its 47 local offices.

This second swingeing round of job cuts in as many years by the UK's biggest quango will be bitterly fought by the Public and Commercial Services Union (PCS), which is warning that any resulting industrial action could spread across other government departments.

Union officials are bracing for at least 800 job losses, the bulk of them among administrative and clerical staff.

According to LSC sources, employees facing the axe will have a chance to apply for a limited number of new higher grade positions. Success will depend on their satisfying a so-called "competency framework" that has already been drawn up.

Lack of competence among local office staff was a recurrent criticism by colleges of the LSC after its launch in April 2001. Mark Haysom, the LSC's chief executive, has made no secret of wanting an organisation with a different blend of talents.

"We need to ensure we have people at every level in the organisation with the right experience and the right skills," he told the Learning and Skills Development Agency summer conference in June.

An LSC spokeswoman said that it would be making an imminent public announcement about its restructuring, but could say nothing until staff had been officially told.

Executive directors of the 47 local LSCs have been summoned to the quango's Coventry headquarters on Thursday to be briefed on the redundancy programme.

The upshot is that the administrative work performed by "back of office" personnel in the local LSCs will be done in the quango's nine regional offices.

The need for 47 local offices, where staff numbers range from 40 in the smallest outposts to three and four times that number in the largest, and the costs involved have long been queried by the Association of Colleges. And the AoC has always rejected the LSC's claim that it costs less to run than its predecessor, the Further Education Funding Council.

Sources inside the quango point out that the legislation that spawned it made no requirement that it maintain 47 local offices, merely that a council - of unpaid volunteers - be set up in each locality.

Some offices could be shut down and others staffed by just their current executive directors.

The PCS union, which represents about 50% of the LSC's 4,000 staff, does not accept the need for job losses and will consider any option, including industrial action, said Andrew Lloyd, its official covering the LSC.

From informal discussions with the LSC, Lloyd is anticipating that it might claim the job losses are not covered by the Gershon review, which demanded 15% efficiency savings across government departments, and therefore it is not under the obligation laid down by a Cabinet Office protocol to make every effort to redeploy staff to other government departments. "If the LSC fails to adhere to that agreement, it could spark action across Whitehall," Lloyd said.